NASDAQ NLX (formerly NASDAQ OMX NLX) is the cross-product trading and clearing platform created by NASDAQ in partnership with LCH.Clearnet Ltd. The exchange, which launched on Friday, May 31, 2013, offers short and long-term interest rates on euro- and sterling-denominated listed derivatives products,[1] challenging the dominant European futures exchanges - the Intercontinental Exchange’s Liffe, which trades the short end of the curve, and Deutsche Boerse’s Eurex, which dominates the long end.

The partnership with LCH.Clearnet made sense for NLX because it has the largest swap book in Swapclear and is majority-owned by the London Stock Exchange Group, which had publicly backed moves to open up Europe’s derivatives markets to competition.[2]

In January of 2017 Nasdaq said it would close down NLX amid flagging volumes, setting April 28 as the last trading day for the exchange. During its fourth-quarter results presentation, the company revealed a quarterly pre-tax loss of US $404 million. Nasdaq will gradually offload its clients beginning in February 2017.[3]

NLX is structured around the new market landscape created by the Dodd-Frank Act, EMIR, MIFID II and Basel III by offering an exchange platform to clear a variety of derivative transactions, including swaps.

History

NASDAQ NLX and LCH.Clearnet received the necessary regulatory approvals to launch the new market on May 29, 2013.[5]

The timing of the launch made it a challenge, because NLX's first year coincided with the introduction of new rules on swaps trading as part of the Dodd Frank Act.[6]

NLX launched with an incentive scheme for market-makers and founding members. The firms that joined the exchange or were near completion of their connectivity before the end of June paid no fees during the month and received a full rebate for all fees up until the end of the year.[7]

To celebrate its one year anniversary on June 2, 2014, NLX launched two new NLX TED Spread Strategies, White and and Rosé.[8]

In March of 2015, Nasdaq NLX became one of the first exchanges to sign up to use LCH.Clearnet's new portfolio margining service, which was expected to boost NLX's trading volume.[9]

In June of 2015, FOW reported that Nasdaq NLX had paid off all of its founding members and ended their founding member agreements. The 15 founders had agreed to support the venue when it launched in return for a portion of the profits when certain trading levels were reached; however, trading volumes fell in 2015 to a fraction of what they were the previous year after NLX replaced its rebate incentive schemes with a new program that paid different rebates per lot based on the volume of trading by individual clients.[10]

The exchange also reduced the number of market-makers on its platform to four from about 10 at its peak.[11]